It all started Monday, when markets rallied after US manufacturing data came in lower than expected. This was a sign for investors that the American economy was slowing, which meant that the Fed would be forced to ease its campaign of aggressive rate hikes.

But yesterday, global equity markets went back to red, after a better-than-expected employment report: The ADP data showed U.S. private employers increased hiring in September. Investors realized that the Fed might not ease rate hikes anytime soon.

However today, data showed an increase in weekly jobless claims, which could indicate that the Federal Reserve may need to ease its aggressive monetary tightening cycle! Investors are rightly confused, which is why volatility increases.

To add to the confusion, we have Elon Musk changing his mind regularly about Twitter. The executive's reversals on this issue are even annoying the investors of his flagship company, Tesla. As proof, the company's stock fell 3.5% yesterday. Oil stocks were the only ones to uniformly support the rise on Thursday. This is because Opec+ decided to cut production more sharply than expected to adjust to slowing global demand. This is of course a way for the cartel to maintain its grip on the price of a barrel and ensure that it remains high.

Now, all eyes will be on the employment report due Friday, because that may give investors more clues about the state of the US economy.

But in any case, it seems naïve to think that the Fed will drastically change its monetary policy on the first sign of a slowing of the US economy, whether it’s a weaker manufacturing report of a weekly job report.

There will need to be much more consistently bad economic data over months for the Fed to change its course.

Investors are getting impatient, and it may be that markets will rally and decline with each new data for the foreseeable future….

 

Economic highlights of the day:

The September Challenger survey and weekly jobless claims data are today's main indicators. All the macro agenda is here. 

The dollar is up to EUR 1.0155 and GBP 0.8895. The ounce of gold is down to USD 1712. Oil jumped yesterday on the announcement of an Opec+ production quota cut, without soaring either, with North Sea Brent at USD 92.97 a barrel and US WTI light crude at USD 87.45. The yield on 10-year US debt has risen to 3.74%. Bitcoin is hovering around USD 20158.

 

In corporate news:

* Ford dropped 0.9% in premarket trading after the company announced an 11% price increase for its F-150 electric pickup due to supply chain tensions and high inflation.

* Twitter is down 1.9% in pre-market trading. Apollo Global Management and Sixth Street Partners, which were considering participating in the financing of Elon Musk's bid, have ended discussions, according to several sources close to the matter.

* Constellation Brands - The maker of Corona beer advances 2.2% to $241 in premarket trading after raising its 2023 like-for-like earnings forecast to a range of $11.20-$11.60 per share from a previous forecast of $11.20-$11.50 per share.

* Eli Lilly announced Thursday that it has received a fast-track approval from the U.S. Food and Drug Administration (FDA) for the use of Tirzepatif in the treatment of adult obesity.

* General Electric is cutting jobs in its onshore wind power business as it seeks to restructure it in the face of weak demand, rising costs and supply difficulties, four sources close to the matter said.

* Peloton Interactive is down 1.6 percent in premarket trading in response to a Wall Street Journal report that the company plans to cut another 500 jobs after reducing its workforce by more than 600 since June.

 

Analyst recommendations:

  • Anglo American: Berenberg downgrades from buy to hold, targeting GBp 3000.
  • Autonation: J.P. Morgan downgrades to neutral from overweight. PT up 19% to $125.
  • Freeport: Exane BNP Paribas downgrades to neutral from outperform. PT down 4.9% to $29.
  • Ford: Ford upgraded to Overweight by Morgan Stanley, Price Target kept at $14.
  • Group 1: J.P. Morgan upgrades to overweight from neutral. PT jumps 40% to $210.
  • Helen of Troy: CL King & Associates lowers PT to $134 from $192. Maintains buy rating.
  • Johnson Matthey: Jefferies remains Buy with a price target reduced from GBp 2400 to GBp 2300.
  • Petra Diamonds: Berenberg upgrades from hold to buy targeting GBp 200.
  • Reliance Steel: Goldman Sachs downgrades to neutral from buy. PT up 6.9% to $201.
  • RPM International: J.P. Morgan upgrades to overweight from neutral. PT up 7.7% to $100.
  • Segro: RBC upgrades from sector perform to outperform targeting GBp 900.
  • Sonic Automotive: J.P. Morgan upgrades to overweight from neutral. PT up 37% to $60.
  • Spire Healthcare: Jefferies maintains a Hold rating with a price target reduced from GBp 251 to GBp 240.
  • Steel Dynamics: Goldman Sachs upgrades to buy from neutral. PT up 13% to $88.
  • Take-Two: Goldman Sachs upgrades to buy from neutral. PT rises 41% to $165.
  • Verizon: Oppenheimer & Co upgrades to outperform from market perform. PT up 27% to $50.
  • Yellow Cake: Berenberg remains Buy with a price target raised from GBp 500 to GBp 600.